SEC Approval of the Documents to be Submitted to the SEC in Lieu of BSP Examiner’s Report on the On-site Verification Validating the Fresh Capital Infusion by the Rural and Cooperative Banks

o Sentral ng J inas

OFFICE OF THE DEPUTY GOVERNOR SUPERVISION AND EXAMINATION SECTOR

CIRCULAR LETTER NO. CL - 2007=036

To ALL RURAL AND COOPERATIVE BANKS

Subject SEC Approval of the Documents to be Submitted to the SEC in Lieu of BSP Examiner's Report on the On-site Verification

Validating the Fresh Capital infusion by the Rural and Cooperative Banks.

Quoted hereunder is the letter dated 20 April 2007 of Atty. Fe B. Barin, Chairperson of the Securities and Exchange Commission (SEC), approving the documents to be submitted in lieu of the BSP Examiner's Report.

"In reply to your letter dated 04 April 2007 on the subject (Rural Banks: Proposed Templates for their Application to Amend' the Articies of Incorporation Involving Increase of Capital Stock to be Funded by Fresh Capital Infusion), please be informed that your proposed templates of the documents to be submitted to the SEC in lieu of the BSP Examiner's Report on the on-site verification validating the fresh capital infusion by the rural bank are acceptable to this Commission. However, for the Notarized Bank Certification to be signed by majority of the rural bank's Board of Directors, we suggest the inclusion therein of the names of the subscribers to the increase in capital stock together with their respective subscription and payment as presented to and approved by the BSP."

Attached are the approved templates of the documents to be submitted to the Bangko Sentral ng Pilipinas:

2 1 Notarized Bank Certification (Annex A); Schedule of Stockholdings Before and After Capital increase and

Schedule of Payments (Annex A-1): 3 Subscription Agreement (Annex B); and 4 "Treasurer's Sworn Statement (Annex C)

The documents submitted shall be subject to verification during examination.

For information and guidance.

ESTOR A. ESPENILLA Deputy Governor

{7 July 2007

Pananalaping Matatag, Bansang Panatag

A. Mabini St., Malate 1004 Manila, Philippines Trunkiine (632) 524-70-11 URL:www.bsp.gov.ph e-mait: [email protected]

Annex A

BAnK certiFIcatIon

On the Increase in Capital Stock of through Capital Infusion of Cash

Secretary, of existing WE, the undersigned members of the Board of Directors and the Corporate under Philippine Iaws ), a corporation duly organized and With office address a

Iaw depose and state that: after having been duly sworn to in accordance with

A The Bank has conducted adequate due diligence review of the true identities of the parties to and sources of funds for the capital infusion;

2 The payment received for subscription were not originally disbursed to the

the form of loans and/or advances; subscribers mentioned in the attached Annex A-1 in the form of Ioans and/or advances or the same was not subsequently returned to the subscribers in

3 All capital infusion to the Bank after the approval by the stockhoiders of the

increase in authorized capital stock is considered as deposit for future stock subscriptions;

A The corporate authorizations and approvals of the equity investment in the

the case of singie purpose companies/individuais, were verified to be legally Bank in the case of corporate investors and the stockholder's resolution in adequate to authorize the equity investment:

5 All documents in support of the increase in the Bank's capital stock, such as receipts/disbursements logbook, official receipts, cashfiow statement. loans/advances accounts, are intact and shall be readity available to the verification/validation/examination; and but examiners not limited Of to: any deposit regulatory slips, agencies bank statements, for further cash

6. faise, the undersigned may be accorded appropriate penalty/sanction and Should any of the foregoing representations and warranties prove to be the Increase in Capital Stock as hereby warranted, may be deemed void.

IN WITNESS WHEREOF, this Certificate has been signed this 20 in Philippines. day of

(Signature over. Printed Name Chairman (Signature over Printed Name) Director

(Signature over Printed Name) Director (Signature over Printed Name) Director

(Signature over Printed Name) Director (Sianature over Printed Name) Corporate Secretary

ACKNOWLEDGEMENT

MUNICIPALITY OF PROVINCE REPUBLIC OF THE PHILIPPINES ) S.S.

day of SUBSCRIBED AND SWORN TO before me in Name 20_-, personally appeared the foliowing persons: CTC.NO. Date/Place Issued this

known to be the same persons who executed the foregoing instrument and they acknowledged before me that the same is -heir own free and voluntary deed.

Notary Pubiic

Page No Book No. Series of Doc. No.

Page 2 of 2

Annex A-1

SCHEDULE OF STOCKHOLDINGS BEFORE AND AFTER CAPITAL INCREASE

Stockholders/ Subscribers Name of Sh ares No. of Before Capital increase (Before Stockhoders & Directors Meeting) Amount Ratio Sh ares No. of Subscription to Capita Increase Amount Ratio Shares No. of After Capital increase Amount Ratio

I. SCHEDULE OF PAYMENTS

Name of Stockholders Date of O.R. O.R. No. Amount

Annex B

SUBSCRIPTION AGREEMENT

On the Increase in Capital Stock of

through Capital infusion of Cash

KNOW ALL MEN BY THESE PRESENTS:

executed by and between: Dated 20w. this Subscription Agreement (the "Agreement") is

under the laws of the"Republic. of the Philippines with office address at hereinafter referred to as the "BANK" a banking corporation duly organized and existing repreeented by its Chairman and President, and

- and -

and hereinafter referred to as the "SUBSCRIBER"

WITNESSETH: That -

WHEREAS, the SUBSCRIBER is one of the Major Stockhoiders of the Bank:

WHEREAS, the SUBSCRIBER has agreed to subscribe to the common shares of the common shares subject to the terms and conditions hereinafter stipulated; capital stock of the BANK and the BANK has agreed to issue to the SUBSCRIBER such

NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have agreed as follows:

1. SuBScRIPtiON tO SHAreS

shall subscribe to and pay the Subscription Price (as hereinafter defined) for SUBSCRIBER the Subscribed Shares. "Subscribed"Shares") and" the BANK shall sell, issue and deliver to the Upon the tems and subject to the conditions of this Agreement, the SUBSCRIBER shares of the capital stock of the BANK (the

2. SUBSCRIPTION PRiCE

2.1. The Subscription Price for the Subscribed Shares shall be 8 R -) per share or an aggregate amount of ) (the "Subscription Price").

2.2. The BANK hereby confirms that the SUBSCRIBER has already remitted to the BANK as of date of this Agreement, the amount of R ), as its fuil payment of the aggregate Subscription Price

referred to in Section BANK as the SUBSCRIBER's deoosit for future subscription and shall be above, which amount has been booked by the

applied as full payment for the Subscribed Shares at Payment Date, in accordance with Section below.

2.3. The SUBSCR!BER's payment on its subscription to the Subscribed Shares under Section except as set forth in Section above shall be non-interest bearing and non-withdrawabie below.

3. SUBSCRIBED SHARES

The Subscribed Shares shail be of shares of the BANK at a total Subscription Price of (D

4. COVENANTS oF THE PARtieS

The BANK and the SUBSCRIBER respectively covenant and agree as follows:

6.1. The BANK shall cause such number of new subscribed by the Maior Stockholders identified in Annex "A""of this Aareement shares to be

of their assignees, out of the increase in the authorized capital stock of the BANK under the Capital Increase, at a subscription price of proceeds of the subscriptions of not less than P R ) per share, which shall result in the BANK receiving aggregate ) (the "New Share Issuance").

6.2. Immediately upon the approval by SEC of the Capital increase as provided in Section increase and the New Share issuance, including the Subscribed Shares. the increase in the authorized capital stock of the BANK under the Capital above, the BANK shall cause all the shares to be subscribed out of

6.3. The BANK shall confirm in writing to the SUBSCRIBER, within five (5) business Share Issuance (such notice, hereinafter "Notice of Corporate Approvals") together with a Secretary's Certificate certifying to such approvals by its Board BANK that all documents required to be filed with the Bangko Sentral ng Pitipinas (BSP) and the SEC for the application for the Capital Increase and the New Share Issuance had been duly executed and that said documents shatl be by its stockholders of the Capital Increase and the New Share issuance. days foflowing the execution of this Agreement, the approval by its Board of Directors and its stockhoiders : the Capital increase and the New Share Issuance, by serving on the SUBSCRIBER a written notice of the approval by its Board of Directors and its stockholders of the Capital increase and the New of Directors and its stockholders and a Certification by a senior officer of the filed with the BSP and the SEC within business days from the approval

6.4. The Bank shall within business days following the approval of its

stockhoiders of the Capital Increase and the New Share issuance, file with the BSP all documents reguired for the application for the Capital increase and the New Share Issuance. Within the next business day following the receipt by the BANK of the Certificate of Authority to Register the Amendments to the Articles Share issuance, the BANK shall file with the SEC all documents required for of Incorporation of the BANK covering the said Capital Increase and New the application for the Capital Increase and the New Share Issuance.

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6.5. The BANK shall, upon receipt of the SEC approval of the Capital Increase and the New Share Issuance, apply the deposit for future subscription as provided in Section -.above, as full payment of the Subscribed Shares.

6.6. The BANK shall within the first approval by the SEC of the Capital Increase, pay the documentary stamp tax on Subscribed Shares. days of the month following the

6.7. For avoidance of doubt, the parties agree that the SUBSCRIBER shall be the BANK has appiied the deposit for future subscription referred to in Section BANK in accordance with Section deemed to have subscribed to and paid for the Subscribed Shares only after the payment for the additional subscription for new Shares and which payment shal te booked by the BANK simultaneously with above as full payment of the Subscription Price for the Subscribed above. shares of the

5. ADDITIONAL COVENANTS OF THE BANK AND THE SUBSCRIBER (OptionaI}

6.1. The BANK covenants and agrees that between the signing of this Agreement New Share Issuance, the BANK shall conduct its business in the ordinary BANK shali preserve intact its business organizations and its current immediately preceding covenants, the BANK shall not, without the and the date that the SEC shall have approved the Capital increase and the significant business relationships.. signing of this Agreement and the date that the SEC shall have approved the Capital Increase and the New issuance, among others: course and consistent with its prior practice. The BANK shall preserve intact its business in the ordinary course and consistent with its prior practice. The relationships with its depositors, customers and other persons with it has SUBSCRIBER's prior written cansent, do any of the foliowing between the Without limiting the generality of the

6.2.State additional covenants x x x

6.. RePRESENtAtiOnS ANd WARRANtIES

The BANK hereby represents and warrants to the SUBSCRIBER that:

6.1. It is a banking corporation duiy organized and existing under the kaws of the Republic of the Philippines, and duly licensed by the Bangko Sentral ng Pilipinas to operate as a commereial bank;

6.2. It has the legal capacity and authority to execute and deliver this Agreement and to perform all the terms and conditions thereof to be performed by it; and this Agreement constitutes a binding obligatian against it enforceable according to its terms;

6.3. The authorized capital stock of the Corporation as of date of execution of this Agreement amounts o consisting Of

shares, each with a par value of

3

D issued. The tems and features of the common and preferred shares are as , of which shares have been subscribed and

provided in its Articles of incorporation, as mended as of

6.4. On Capital increase, New Share issuance and Listing of Shares and on issued and outstanding shares of the BANK approved and ratified each of such affirmative vote of majority of all the members thereof, each of the aforesaid Capital increase, New Share Issuance and Listing of Shares. the stockhofders representing at least two-thirds (2/3) of all the Board of Directors of the BANK approved by the

6.5.The SUBSCRIBER represents and warrants to the BANK that:

6.5.1. He has the legal capacity to execute and deliver this Agreement and to this Agreement constitutes binding obligations on his part and perform all the terms and conditions thereof to be performed by it; and enforceable according to its tems; and

6.5.2. The payment for subscription were not originally sourced from the Bank either in the form of ioans and/or advances or the same was not subsequently retumed by the Bank in the form of loans and/or advances.

6.5.3. The execution, delivery, and performance by the SUSBCRiBER of this other undertaking or instrument to which the SUBSCRIBER is a party or Agreement does not and will not violate in any respect any provision of, or result in breach of, or constitute a default under (i) the organizational documents of the SUBSCRIBER, or (ii) any indenture, agreement or which is binding upon the SUBSCRIBER.

6.6. Shoutd any of the foregoing representations and warranties prove to be faise or misleading in any material respect, the adversely affected party may, by party to cure such breach of warranty. In the event that the breach of three (3) months from said notice or claim presentation, institute the proper proceeding to seek indemnification from such other party in the form of actual damages which indemnity shall in no case exceed the amount equivalent to costs incurred by the said party in connection with said Subscribed Shares. Each party hereby waives any other remedy or period availabie under law, regutation or contract for breach of representation or warranty. providing notice or presenting claim to the other party at any time within a period of one (1) year from the execution of this Agreement, require such other representation or warranty is not cured, the adversely affected party may within % of the paid-up value of the Subscribed Shares plus all reasonable

7. TERMINATION AND WAIVER

in case any of the following occurs:

7.1. Failure of the BANK to obtain the approval of the BSP and the SEC for the Capital Increase or the New Share issuance by other date as the BANK and the SUBSCRIBER may mutually agree upon in or as of such

4

writing, due to reasons other than attributable to the fault or negligence of the SUSBCR!BER:

7.2. A Material Adverse Effect on the 3ANK shall have occurred at any time prior to the date on which the BSP and SEC shal! have approved the Capital increase and the New Share Issuance; or

7.3. Failure of the BANK to perform its obligation under this Agreement:

7.4. The SUBSCRIBER shali have the option to terminate this Agreement, in which case, the BANK shatl refund to -he SUBSCRIBER the full amount of the Subscription Price already remitted to the BANK as of effective date of termination, without interest and the SUBSCRIBER shall have no more obligation whatsoever under this Agreement.

8. EFFECT OF tERMINATiON

in the event of terminations this Agreement as provided in Section Agreement shall forthwith become void and of no further effect and there shall be no liability on the part of either party hereta except (a) the terms and provisions of this Section Sections and -, shall remain in full force and effect, and (b) that above, this

such termination shall not relieve any party from liability for any willful breach of this Agreement.

!N WITNESS WHEREOF, this Certificate has been signed this 20 in Philippines. day of

(Signature over Printed Name) (Position) (Signature_over Printed Name) (Pos ition)

(Signature over Printed Name) (Position) (Signature over Printed Name) (Position)

ACKNOWLEDGEMENT

REPUBLIC OF THE PHILIPPINES PROVINCE MUNICIPALITY OF ) S.S

this SUBSCRIBED AND SWORN TO before me,A Notary Public, in day of 20.... personally appeared the following persons:

5

Name CTC No. DatePlaceIssued

known to be the same persons who executed the foregoing instrument and who acknowiedged to me that the same is their own free and voluntary deed.

Written. WITNESS MY HAND AND NOTARIAL SEAL on the date and p{ace first above

tay Pubc

Doc. No. Page No. Bk See of

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Annex c

ProVINcE oF REPUBLIC OF THE PHILIPPINES CITY/MUNICIPALITY OF ) S.s

TREASURER'S SWORN STATEMENT

E Filipino, of legal age, and with business

accordance with law depose and state that. address at after having been duly sworn to in

I am the duly elected Treasurer o principal business address at eiected as such on the day of and in the name of the Bank ali payments for the subscriptions to the increase in 20 , and duly authorized to receive for having been with

capital stock

2 the increase in capital stock, the anount of amount was actuafly received by me for the benefit and credit of the Bank. Of the ) has been paid in cash/in the form of cash and that said Pesos (P representing Pesos

3 At ieast iwenty-five percent (25%) of the increase in capital stock has been

subscribed and the amount actua:ly paid-up is at least twenty-five percent (25%) of said subscription and has been actually paid by the subscribers in cash/in the form of cash.

A Said additionai paid up capital represents fresh funds of the corporation for use

in its operations 5 One hundred percent (100%) of the Bank's capitai stock is owned by citizens of

the Philippines. the Philippines and that all the members of the Board of Directors are citizens of

IN WITNESS WHEREOF, I have hereunto affixed my signature this day of 20 in Philippines

(Signature over Printed Name) Treasurer

20 Community Tax Certificate No SUBSCRIBED AND SWORN TO before me, a Notary Public, for and in this day of issued at 20 affiant exhibiting to me his/her

Series of Doc. No. Page No. Book No. Notary Public